The world economy has been in recession over the past few years and the economy of South Africa is not an exception to this trend. Due to the economic downturn, lenders in the country have become much more stringent when granting loans so that they minimise the risk associated with default as much as possible. As a result, it is now harder for loan applicants to get approved.
Despite the tough economy, it is possible to get a good personal loan deal. Here is how:
Decide on the best type of loan for you
There are two main options to pick from - unsecured and secured personal loans. The unsecured loans require no collateral while the secured ones do. Basically, you place an asset as surety that you will repay your debt. This asset can be your house, your car or another object of value. Given that collateral is placed, secured loans are easier to get and often come with more affordable interest. However, if you cannot manage to repay your debt, the asset which you have placed as collateral may be acquired by the lender.
Pay off any debt that you currently have
If you have existing debt such as outstanding payments on your credit card or checking account overdraft that you have not repaid, lenders will be more hesitant to grant a personal loan to you. This is because you will have a smaller disposable income for repaying the new loan after repaying your existing debt.
The more loans you have the greater the risk of defaulting on one is. That is why it is crucial for you to clear any current outstanding debt.
Improve your credit history
Your credit history shows how reliable you are as a borrower. The more reliable you are the lower your interest will be and the more you will be able to borrow. Improve your credit history by paying all your monthly bills on time and by making at least minimum payments on your credit card. If despite your effort you have a bad credit rating, you can get a personal loan from a lender specialising in bad credit loans.
Review your credit report
The lender will decide whether to approve you for a loan based on your credit report. That is why you should request it from one of the reporting agencies such as Experian or Transunion, review it for errors and missing information and have all issues fixed. You must ensure that the report contains only accurate up to date information before you apply for a personal loan.
Use a specialised online service to obtain quotes from as many lenders as possible and compare them carefully. Look for the best loan for you based on your income and overall financial situation.